The House of Representatives did not win over many hearts this Valentine’s Day with its proposed transportation bill, the misnamed American Energy and Infrastructure Jobs Act (H.R. 7). City dwellers of all political stripes oppose the way it strips public transit of a steady funding stream. Architects, planners and commuters decry its emphasis on easily-congested highways to the detriment of smart growth strategies. Environmentalists and the Episcopal Church oppose back-door efforts to open huge swaths of our country to drilling, including offshore areas and the fragile Arctic National Wildlife Refuge in Alaska. We should add to this list of opponents anyone who wants to see the United States continue on its fragile path to economic recovery. This bill—along with several of the amendments that have been submitted for attachment to it—seems designed to stop job creation in its tracks and turn many of the good transportation jobs we already have into low-quality ones.
Economy & Budget
In his recent State of the Union address, President Obama revisited a key proposal from his 2008 campaign: to reform a corporate tax code that he says encourages U.S. firms to invest and expand overseas. Few would disagree that corporate tax reform is needed, but the universal system Obama has proposed is the direct opposite of the territorial system favored by many large U.S. corporations. Not surprisingly, Obama’s calls for reform have failed to gain any traction on Capitol Hill. However, it is possible to achieve the President’s goals while also satisfying big business and both political parties.
A true universal system, such as the President proposes, would tax the worldwide profits of American corporations regardless of where those profits are held. (Currently, corporate offshore income is taxed only when it comes home to the U.S. This lures companies to keep profits overseas, reducing tax revenues and discouraging domestic investment.) A territorial system, conversely, would tax only those profits earned in the United States.
Promoting fears about the budget deficit is a major industry in Washington. The central theme is usually that we have out of control spending which will make us just like Greece in only a few short years. The policy take away from this story is that we have to cut Social Security and Medicare, and the sooner the better. This is just the idea put forth by Rep. Tom Cole (R-Okla.) in a recent piece that appeared here on the Congress Blog.
Everything in this picture is wrong. The basic story of out of control deficits as an ongoing problem is nonsense. While people may have complained about the deficits in the Bush presidency, the debt-to-GDP ratio was actually falling by the end of his administration and was projected to continue to fall for the foreseeable future, even without the ending of the Bush tax cuts.
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” Barack Obama was just 25 when President Ronald Reagan uttered those memorable words, but he evidently took them literally. President Obama has set a new standard for boundless government hyperactivity: taxing job creators, over-regulating domestic energy, and subsidizing economic failures like Solyndra.
When Democrats controlled Congress, President Obama grew government the old-fashioned way. He raised taxes on tanning beds, medicine and medical devices as a warm up, and then turned to the $500 billion tax hike included in his healthcare bill. These taxes are literally loss leaders compared to his oversized budget plans. With four consecutive years of trillion-dollar deficits, a budget written in red ink for the next decade, and no plan to tame the entitlement juggernaut, the real taxes hikes have yet to arrive.
When his legislative hammerlock was broken, the president moved from taxation to regulation. In Obama’s eyes, Congress has changed from a superhighway to a speed-bump. Take, for example, the new head of the Consumer Financial Protection Bureau, Richard Cordray. Lacking the requisite votes in the U.S. Senate, President Obama just decided to appoint Cordray while Congress was still in session, trampling on the Senate’s advise and consent role.
As couples across Indiana, and across the country, celebrate Valentine’s Day this week by presenting chocolates, candies, and other sweets to their sweethearts, we are reminded once again of the sour affect that the U.S. sugar program has on businesses and consumers.
The federal government’s sugar support program is a complicated system of marketing allotments, price supports, purchase guarantees, quotas, and tariffs. This Depression-era program actually raises the price of sugar paid by U.S. manufacturers and consumers, reducing domestic food production, employment in confectionery businesses, and opportunities for U.S. exports.
In sugar land, prices are set by the government, not the market. Each year, the U.S. Department of Agriculture determines “marketing allotments” to assure domestic producers at least 85 percent of the domestic sugar market. The government also limits imports, to help keep prices inflated far above world levels. If U.S. sugar prices fall below the official level, a price-support system of “loans” to processors ensures that 'Big Sugar' gets its federal share. The recipients get their loans in taxpayer dollars, but can repay them in (what else?) sugar.
It’s often said that budgets are a statement of our priorities and values. While this is true, a budget is so much more. Ultimately, a budget should be a demonstration of leadership and illustrate the path that America will be headed down.
Right now, our nation needs a budget with leadership. We’ve run three successive $1 trillion dollar-plus deficits and a fourth is projected, seen our nation’s debt as a share of the economy rise from 64 percent in 2006 to almost 100 percent today and watched our nation’s credit rating downgraded for the first time in history. Instead of reforming unsustainable programs like Medicare and Social Security, we added a new entitlement program in the form of President Obama’s health care law that will only add to the trillions of dollars in unfunded liabilities already facing taxpayers. No nation can prosper carrying the mountain of debt our current fiscal path will have us carry. The status quo has us firmly on a path to decline.
With great fanfare, the Obama administration and the state attorneys general recently announced the completion of what’s being touted as the largest consumer financial protection settlement in U.S. history. The country’s top mortgage servicers agreed to provide as much as $25 billion to help some past and current homeowners because banks regularly submitted foreclosure documents that were not properly reviewed or notarized (aka robo-signing).
At first blush, the settlement would appear to present an ideal opportunity for the market — paralyzed in part by the uncertainty over potential legal liabilities — to move ahead towards a much-needed housing recovery. In that regard, its completion was way overdue. In fact, by some accounts the statute of limitations on some of the abuses either had already or was about to run out.
While some will surely argue that the banks should be squeezed for more, the deal does provide some meaningful assistance for distressed and underwater homeowners. Mortgage servicers also agreed to a new set of standards to govern how they must work with homeowners moving forward who are at risk of foreclosure. It’s hard to take issue with a well-intentioned, bipartisan agreement between the legal authorities and the banks over admittedly shoddy mortgage paperwork.
I can still remember my first meeting in the Science, Space, and Technology Committee. At the time, I was new to the endeavor (as a freshman member that fact was unavoidable), and I was trying to feel my way through the particularities of the committee. There I was – a long-time teacher and school principal, entering a chamber where over the next two years I would be responsible for contributing to discussions forming our nation’s science and space policy during uncertain economic times.
I felt I had a grasp of the difficulties that lay ahead of not only me, but for the committee as a whole, entering the new fiscal realities of a recession. I feared for the funding of the scientific field – particularly at the government level. It was already apparent prior to my arrival that the United States’ engagement in space was about to shift dramatically, and I could only hope that my experiences exciting schoolchildren about the wonders of science and the discoveries great explorers were enough to prepare me for the challenges in store.
As a freshman representative I remain hopeful and optimistic. Despite the discord so widely reported over the last year, I went into the president’s State of the Union address hoping that he would step up and propose fresh, new ideas to grow our economy and help our unemployed friends and neighbors find jobs. And I was optimistic that he would put party line politics aside and work to unite us as one people – not divide us for political gain.
Instead, unfortunately, I heard more of the same.
Neither party is without fault. We aren’t in today’s debt and jobs crisis because of one party’s actions. So we must work together to get our fiscal house in order, promote economic growth, and save the American dream for future generations.
Many in Congress believe, as I do, that the budget is a statement of national values and should reflect where we stand as a people. Of course, composing a document to encompass the values of our diverse nation can be difficult. We come from different backgrounds and have unique needs and expectations from our government.
But despite our differences, our truly American values remain as clear today as at our founding. Caring for families, seniors, the poor, sick and disabled. Promoting business and expanding educational opportunities to help our neighbors find work. Maintaining public safety and national security.